U.S. regulator launches broad probe into prediction market Polymarket

The U.S. Commodity Futures Trading Commission, the main watchdog for U.S. prediction markets, has opened a broad investigation into Polymarket, according to a person familiar with the matter. The probe comes as Washington grows increasingly uneasy about rapidly expanding prediction markets, which let users bet on everything from U.S. elections and sports contests to cultural events.

Polymarket has drawn fresh political scrutiny over wagers tied to the war in Iran, which prompted criticism from both Republican and Democratic lawmakers who raised concerns about possible insider trading. A consumer advocacy group also filed a lawsuit against the company yesterday, accusing it of misleading advertising on social media.

Polymarket did not directly address the investigation. In a statement, company lawyer Olivia Calus said, "We are part of a rapidly growing industry, and we are consistently looking at ways to improve how we communicate and earn the trust of our public." She added, "As part of our commitment, we are conducting a comprehensive review of our active advertising content to ensure it meets the standards we set, and any regulatory rules and legal requirements."

The investigation was first reported yesterday by The Wall Street Journal, which recently published an in-depth report on Polymarket's use of "fake videos" on social media. Politico reported earlier this month that a senior Polymarket executive used his personal PayPal account to transfer funds to major content creators. This is not the company’s first regulatory fight. In 2022, Polymarket agreed to pay $1.4 million to settle CFTC allegations that it had operated an unlawful exchange in the United States. Last year, the CFTC and the U.S. Department of Justice opened investigations that led to a raid on the home of the company’s chief executive, Shayne Coplan.